Every year, a lot of foreign entrepreneurs make up their mind to set up a business in the UK, but they do not always find the best type of a UK company for their business project and understand all the specificities of registering a UK company. Our specialists have prepared answers to some frequently asked questions related to setting up a business in the United Kingdom.
Every year, the UK ranks high in the top ten most attractive investment destinations for doing business. This is largely due to the developed and extremely crisis-resistant economy, the huge market for goods and services and the government’s support of entrepreneurs. The UK has one of the lowest corporation tax rates in the world, and registration and business procedures are extremely simple. English commercial courts are independent which sets them apart from similar courts in other countries.
That is why entrepreneurs from all over the world consider the UK a perfect platform for doing and expanding their businesses. Registration process is relatively simple even for a foreign citizen and takes just a few days. In this article, we will have a look at what is involved:
How to choose a company type
1. Limited liability company (Limited or Ltd) is the most popular type of a UK company. Shareholders’ liability is limited to the value of their shares and financial guarantee. A share can cost as little as one pound.This type is suitable for both dormant and operating companies.
2. Public limited company (Plc) is considered to be more prestigious as shares can be traded on stock exchange. This type is often chosen by large companies, e.g. when opening a subsidiary in the UK.
3. Limited liability partnership (LLP) is an independent business entity where partners have only liability limited up to the money they contributed at the registration of the company. This type is different in a way that the entity itself does not pay corporation tax – the beneficiaries are those who have to report and pay tax on the income distributed to them from the partnership’s profit. Therefore, an LLP is convenient for those partners who are not UK tax residents and who want to save on taxes.
4. Scottish limited partnership (SLP). An SLP and tax authorities interact in a manner which is very similar to traditional limited liability partnerships. There are only a couple of differences:
— Scottish partnerships have general partners who, unlike limited partners, can take part in business management but their liabilities will not be limited to their shares, they risk losing all their assets;
— this type of partnership is registered in Edinburgh, the capital of Scotland;
— if an SLP operates outside the UK, there is no obligation to file a financial report.
What is a dormant company?
According to the British corporate law, you can set up a dormant company. A dormant company is a business entity which does not have any business activities in the reporting period, and which does not have any significant transactions going through its bank accounts.
A dormant company does not mean that founders are not responsible for submitting a financial report each year; they still have to do it even though it will show nil.
Who needs a dormant company
A company that does not trade is set up for future operations in the UK. It does not take up much time or money to do it, but a dormant company can be immediately “awakened” when agreements on UK deals are reached.
Another option is to sell a dormant company to entrepreneurs who have been successful in negotiating deals with foreign partners but do not have time to register their own company from scratch.
How to set up a dormant company quickly
Such a company does not take a lot of space; you do not even need to travel to the UK since the entire registration process can be done online.
However, it would be a mistake to think that absolutely anyone can do it. For those who are opening a dormant company for the future as well as for those who are confident enough in their business but struggle with registering a companys offers a Standard package.
How to choose a name for your company
Standard package includes assistance with finding the right name for your future company. British corporate law has the following restrictions:
1. A name should not be identical or similar to the names of existing British companies.
2. Insulting or inappropriate words and expressions are not allowed.
3. You are not allowed to refer to illegal activities in the company name.
4. You will most probably not be able to use words and expressions that somehow show your affiliation with or patronage by the Government and the Queen. To put it simple, leave out any “Royal” references.
5. If you include a word in the name that can be interpreted as ‘sensitive’ in corporate law (bank, trust, fund, foundation, health care, etc.), i.e. referring to activities that require licensing, you will need approval from the relevant regulatory authority.
What an incorporation package includes
The Standard package includes the following:
— preparing the required paperwork and assisting with filling in the registration form;
— filing an application with the Companies House and obtaining a registration certificate and copies of memorandum and articles of association;
— providing services of a corporate secretary that are necessary if, for example, there is a change in founding members;
— providing a registered address in the UK for the registration of your business and receiving correspondence from the Companies House and HMCR.
Solutions to set up an operating company in the UK
If you incorporate a company in order to start trading immediately in or outside the UK, you will need more detailed legal advice. A n active company means more business correspondence, more reporting and, in some cases, physical presence of company employees in the UK. In this case, they have prepared two packages: Standard Plus and Imperial.
Comprehensive support of your company in the UK
Apart from assistance with incorporation and providing a registered address, the Standard Plus package also gets you a UK postal address, a landline telephone number and an office manager who will forward any important incoming information and generate a telephone and email report.
The package provides a great scope of services for setting up a company in the UK, including regular expert advice on financial and legal matters, VAT registration of the trading company and assistance in obtaining business visas for two employees.
Opening a UK bank account
It is not easy for foreign nationals to open an account with UK banks. However, once you manage to do it, you can rest assured that your money is safe and you get access to cheap loans. That is why the main value of the package is the support in opening a corporate account with a UK bank or any other reputable European bank.
Imperial & Legal’s services are not limited to the above mentioned three packages. We are happy to support aspiring entrepreneurs in a wide range of matters, from bookkeeping to the preparation of their first accounts and tax reports.